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The Unusual Billionaires

Asian Paints: Seven Decades Of Excellence

The chapter starts with the history of the paint industry in India. During World War II, there was a ban of imports on paint. This gave domestic entrepreneurs to take a look at this industry which was earlier dominated by a few MNCs and few Indian companies like Shalimar. 


Asian Paints was started around that time by a twenty-six-year-old entrepreneur, Champaklal H. Choksey and three of his friends – Chimanlal N. Choksi, Suryakant C. Dani and Arvind R. Vakil. After Champaklal’s death, his family sold their stake and now the three families own majority stake in the company. According to Mukherjea, Asian Paints is an exemplary case study of a home grown brand taking on domestic and foreign competition and winning in India. The company, also being majorly held by promoters, is professionally managed. A trait less seen in the Indian context.


Mukherjea has divided the company’s journey into 3 phases over the years. Each phase led to a transformation in the company to make it stronger for the future. Let’s look at each of the stages.


Phase 1: 1942-67

The company started in 1942 by the four friends. Out of them, Champaklal is remembered as a visionary and a statesman to the paint industry. His strengths lay in reckoning the consumption trends and patterns earlier than the competition. He also recognized early that industrial paints were not a segment to concentrate upon due to lower margins. He instead bet his fortune in developing the decorative paint market in India. Contrary to the expectations, he actually started from the rural markets.


The company began by pitching its paints to Tamilians during the Pongal festival and Maharashtrians during the Pola festival. Here, people used paints in order to paint bulls’ horns which were worshiped during the festival. Here Choksey noticed that small packs of good quality paints were not available. Hence, he started to market small packs of these paints even at low margins to gain customer trust. Now as the company gained popularity, even the city dealers wanted to stock the company’s products.


The next consumer demand gap was noticed by him when he saw that plastic emulsion paint was 5 times costlier than basic distemper. People hated basic distemper as the quality was not good, however, were left with no choice due to unaffordability. Hence 1950, he introduced washable distemper placed between dry distemper and plastic emulsion. 

By 1967, by its twenty fifth year, the company became the largest paint company in India by revenue. The company was also able to improve its margins and return ratios by the end of this phase.


Phase 2: 1967-97

The company also understood quite early that it needs to hire best in class talent and retain them for long, if they wanted to succeed in the ever-changing market. Asian Paints recruited from top Indian institutes like IIMs, IITs, etc.


The company was also far sighted enough to understand the importance of computers and hence became the first Indian company to purchase a mainframe computer back in early 1970s. The company used to forecast demand in order to improve supply chain efficiency. In 1982, the company got listed on the stock exchanges to create history. The company has given a CAGR of 25% from 1991 to 2016. If you had invested ₹ 1 in the shares of Asian Pains in Jan of 1991, it would be worth ₹ 299 by April 2016. Compared to this, a rupee invested in Sensex would be worth just ₹26.


This phase also saw the rise of Atul Choksey, son of Champaklal Chowksey. Like father, he also went ahead with strengthening the operating efficiency. He was credited with expanding the operations of the company beyond west India, to south and north. Many iconic Asian Paint’s brands like Utsav and Royale were launched. The quest for expansion continued with entering into joint ventures (JVs) for manufacturing automotive finishes and certain industrial products. 
Hence Phase 2 saw the expansion of the company along with investment in IT infrastructure.


Phase 3: 1997-2015

This phase started with the loss of Champaklal Choksey, who died at age of 81. After this, there were a few instabilities in the relationship of the promoter families. Atul’s plans were not being approved by the other three families and hence out of anguish, Atul sold 9% of his stake to a competitor. However, this sale was blocked by the promoters and finally after an eight-month long battle, the competitor had to sell that stake to some mutual funds. 


After this, the remaining three families thought of modernizing the structure of the company. They hired management consultants who advised them on best manufacturing practices, improving working capital cycles, improving organizational structure, etc. By 1999, the company started aggressively investing in technology such as software for supply chain and demand forecasting and ERP. This resulted in an impressive reduction in the working capital days of the company from 100 in 1995 to just 20 in 2015.



During this phase, the company also expanded to Oman, Sri Lanka, Egypt and Singapore. They entered into the Home Improvement Division in 2013.


To summarize, in Phase 3, the company got institutionalized by being managed professionally, i.e., by a non-promoter CEO. In addition, technology enabled the company to drastically reduce management’s efforts in day-to-day operations and concentrate on expansion. Home Improvement Division like Modular Kitchens and Bathroom Fittings, were possible due to this increased bandwidth.


Now, what is the secret sauce of Asian Paints success?

Well, there can be many, but the author has left us with 2 main factors.


  1. Focusing on Core Business: Throughout the first 50-60 years of inception, the management had spent their time and money on just two things, supply chain efficiency and brand development. This paid off well in the future. The promoters refrained by going into unrelated diversifications.
  2. Deepening Competitive Moats: We understand this by Mukherjea’s IBAS framework - Innovation , Brand , Architecture ,St rategic asset.




  • Product innovation: Starting right from the beginning, the company came up with small packaging of paints that can be used during festivities. Then washable distemper was a successful innovation.
  • Supply chain management: Asian paints was the first one to give its distributors a 3.5% extra discount if they made payment on time. Then they used GPS to track their goods in transit. Demand forecasting and electronic billing at the branch level were also some of the supply chain innovations that made the company a success.
  • Empowerment of professionals: The promoters are credited to have kept a culture in the company that ensured quicker decision making with biases or interference from the promoters. Hence, they were able to attract and retain talent even with a lower base package than the industry.


The company has a very strong brand recall. They have spent heavily on advertisements. The “Gattu” mascot was designed by the famous RK Lakshman and remains the longest run mascot for the company as it attracted the Indian consumers. Post 2002, the company moved towards premium marketing.



There were three critical aspects of Asian Paints architecture:


  • Creating a unique working culture that nurtures talent.
  • Using technology to improve competitive advantage.
  • Creating an independent board of directors to shape the evolution of the firm.

Strategic Asset

The company’s strategic assets are:


  • Its wide geographical spread of supply chain network
  • Deep rooted relation with paint dealers

Mukherjea also notes that it seems that now the company is preparing for the future by investing in:-


  • Business related to homes such as kitchenware and bathroom fittings
  • Services they could disrupt the traditional Indian model of hiring painters to paint their homes.

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